Performance Shipping Secures $37.8M Sale-Leaseback for LR1 Tanker Due 2027
Event summary
- Performance Shipping has secured a $37.8M sale-leaseback agreement for its LR1 tanker, M/T P. San Francisco, scheduled for delivery in early 2027.
- The 10-year bareboat charter includes daily payments of $5,451 and a balloon payment of $18.1M at maturity, with an implied interest rate of Term SOFR + 2.00%.
- The vessel is already chartered to Mercuria Energy for four years at $23,750/day, exceeding the breakeven rate of $22,200/day.
- Performance Shipping retains repurchase options starting two years post-delivery.
The big picture
This sale-leaseback deal aligns with Performance Shipping’s strategy of fleet renewal and balanced financial management, securing financing well ahead of delivery. The transaction reflects broader industry trends of leveraging sale-leaseback structures to optimize capital efficiency in the tanker sector. The vessel’s charter to Mercuria Energy provides revenue visibility, mitigating some of the volatility in spot market rates.
What we're watching
- Debt Management
- Whether Performance Shipping can sustain its conservative cashflow breakeven amid potential fluctuations in charter rates.
- Market Conditions
- How global oil production and storage trends will impact demand for LR1 tankers.
- Execution Risk
- The pace at which Performance Shipping can repurchase the vessel and integrate it into its long-term fleet strategy.